Local Government Deficits Could Inhibit Recovery

By Rosenbaum, David E. | THE JOURNAL RECORD, June 1, 1991 | Go to article overview

Local Government Deficits Could Inhibit Recovery


Rosenbaum, David E., THE JOURNAL RECORD


N.Y. Times News Service WASHINGTON _ States and mun- icipalities across the country plan to raise taxes and cut spending by tens of billions of dollars in the fiscal year that begins July 1, and economists fear that the money this takes out of consumers' pockets could inhibit recovery from the recession. Edward M. Gramlich, a professor of economics at the University of Michigan who is studying the situation for the Congressional Budget Office, has con- cluded that belt-tightening by state and local governments could send unemploy- ment up one-half of one percentage point nationwide and much more in New York, California and New England, where fiscal problems are the worst. "This will make it more difficult to pull out of a recession this summer," Gramlich said. By some calculations, the tax& increases and budget cuts by state and local governments could total $50 billion in the next fiscal year. The economic effect would be the same as that of a comparable cut in the federal budget deficit. And the political difficulties in& achieving deficit reductions of this magnitude could be as great as they were when President Bush and Congress struggled for months last year to reduce the federal deficit by almost $50 billion. The prevailing, although by no means unanimous, view among economists is that the recession that began last July will bottom out in the late spring or summer and that the economy will return to a path of slow growth. The econom- ists expect that to happen even though for the first time since World War II, the federal government is not stimulating the economy. David D. Hale, chief economist at Kemper Financial Services in Chicago, predicted that the steps the states were taking to eliminate their budget deficits would result in "quite a significant economic drag" and would "reinforce the recession" in many states. Hale, a native Vermonter, is an adviser to Gov. Richard A. Snelling of Vermknt and pays close attention to state budget issues. Few states have completed their budgets for the next fiscal year, so the amount of tax increases and spending reductions cannot be calculated pre- cisely. But the National Conference of State Legislatures, the foremost author- ity on the subject, estimates that 21 states must deal with a total projected budget deficit of more than $35 billion in the next fiscal year. That figure represents a two-year deficit for a few states that operate under biennial budgets. Unlike the federal government, states by law cannot operate in the red. While some states may disguise part of their deficits with accounting gimmicks, almost all the $35 billion will have to be eliminated by raising taxes or cutting spending. Ronald K. Snell, fiscal program director of the Conference of State Legislatures, expects the states to enact about $15 billion worth of higher taxes and to eliminate the rest of the deficits by spending reductions. Hal Hovey, publisher of an authorita- tive newsletter called State Budget and Tax Notes, estimates that more than 60 percent of Americans will be hit with a state tax increase in this calendar year. No one has tallied what is happening at the local level. But cities, counties and school districts across the country are having to cut back. Gramlich and Hale said they would not be surprised if state and local tax increases and budget cuts beginning July 1 totaled $50 billion, about 1 percent of the country's gross national product.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Local Government Deficits Could Inhibit Recovery
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.